Reprinted from American Funeral Director Magazine, August 2017, with permission of Kates-Boylston Publications.To subscribe to American Funeral Director visit www.americanfuneraldirector.com.

Undoubtedly, caskets and urns areelements of a funeral. But, unless thereis some form of spectacularcustomization, both are containers forhuman remains. Marketing by the bigcasket companies shifted focus awayfrom services to their manufacturedproducts, thus attempting to makecaskets and urns the centerpiece of afuneral. Unfortunately, while thisbrilliant marketing was taking place,the price of caskets skyrocketed andprices for services stagnated. The tragedy is many professionals

drank the Kool-Aid. Their own servicecharges lagged, thus contributing tothe now-lackluster funeral home profitmargin of around 7 percent.For those that do not know, there

was a time I worked for a big casketcompany. Thus, I have firsthandknowledge regarding products,contracts, marketing and training bycasket manufacturers that also sellurns. To set yourself on a path toward

greater profitability, you must firstfully appreciate what I said earlier:Caskets and urns are both containers

for human remains. That is it. I amnot at all suggesting simple wood,metal, ceramic, or other material doesnot have some sort of meaning togrieving families; however, theemphasis is on the life lived, not thebox displayed. I acknowledge that the selection of

such products is an emotional event,not only for the family, but also forfuneral directors. However, thebottom line is a casket or urn is acommodity that is purchased from afuneral service provider, bought onlineor even made by a family. Doesanyone remember a presidentialelection slogan – “It’s about theeconomy, stupid?” In our profession,“It’s about the service, period!”My favorite question when I meet

with funeral home owners anddirectors is, “Why is your firm betterthan the competition?” Without adoubt, I will most likely hear, “Wegive better service,” which is the greatunquantifiable nonanswer. I usuallyfollow up by asking how manyarrangements and services theyactually attended – with the only

response being a blank stare. At anygiven funeral home, services can be amultitude of identifiable action points.I’ll share a few that I am privy to anddeem giving better service:• Some funeral homes collect

enough data from a family about thedeceased to allow them to completethe death certificate before thearrangement conference. This is greatservice because the funeral directorscan then spend time working with thefamily to create a meaningful servicerather than focusing on empiricalinformation.• I know of a funeral service

provider that, before leaving thefuneral home to make a homeremoval, will call the home (often ahospice nurse) and ask if there isanything that can be picked up on theway for the family, such as diapers,food, or other needed items.• Rather than allow limousines to

sit in a garage collecting dust, somefuneral homes will send a car for theprimary family members to makearrangements.• Assignment of a nonlicensed staff

BusinessBy Jeff Harbeson

Why is it that consumers don’t revere caskets and urnslike the vast majority in the funeral profession?

What’s More Important:

Products orService?

Pg. 32 Product or Services (Harbeson).qxp_Pg. 00 Ben Franklin 9/21/17 8:09 AM Page 32

Reprinted from American Funeral Director Magazine, August 2017, with permission of Kates-Boylston Publications.To subscribe to American Funeral Director visit www.americanfuneraldirector.com.

member to act as a concierge of sortsfor families.The most important aspect of trans-

ferring emphasis from caskets andurns to services provided is appro-priate pricing. Pricing for services isessential to funeral home profit.Unfortunately, many funeral serviceproviders do not use successful pricingformulas. I know that some funeralhome owners make pricing decisionsbased on their competitors’ pricing.

As my cohort Dan Isard says,“Why are you basing your prices onthe competitor you otherwise call thetown idiot during the rest of theyear?” I also cannot understand why a vast

majority of funeral home owners onlychange prices once a year, usuallyaround the time that casket prices goup (they never come down).Monitoring profitability is a functionof fiducial responsibility by theadvisers to funeral home owners,especially accountants. The truth ismost accountants, especially localaccountants, haven’t a clue aboutfuneral home operations and cannotidentify trends that may necessitatepricing changes. If your accountantdoesn’t know the difference between arough box and an alternativecontainer, most likely you’re notgetting the benefits of good advice.

Pricing begins with knowing yourtrue operating overhead. Dividingyour overhead by your number of callswill give you an approximation of theprices you need to charge to makeprofit. The services provided, not thetype of casket sold, generates recoveryof overheads for funeral homes. Themost important formula to know isGPL + P&L = EBITDA. Your GeneralPrice List pricing has a direct corre-lation to your profit and lossstatement and ultimately the value ofyour business.The consideration for pricing of

caskets and urns is a relatively simpleexercise. I do remember a verysuccessful and wealthy businessman,Thurston Howell III, who said, “Buylow and sell high.” This is applicableto pricing of funeral-related products. Consumers have exhibited a

downward shift of purchasing

expensive caskets. There will alwaysbe a slim few that buy upper-endcaskets for various reasons. However,reality demonstrates that the days ofregularly selling at-need bronze,copper and mahogany caskets are athing of the past. Relying on a high-end casket sale is like playing thelottery: Your number may never comeup and you’ve wasted dollars on hoperather than corrective behavior oreffort. If you want to know what your

average casket sale is, add up the totalnumber of casket sales. Then add upthe total retail cost of those sales.Divide the cost by the number ofsales. That’s your average retail sale. Do the same with your total casket

sales and your total wholesale cost,and voila .... that’s your averagewholesale (or what you paid) for thecaskets. Now, subtract the total ofhow much you received in revenuefrom sales by the wholesale cost youpaid for the caskets, and that’s yourprofit per sale. The net profit from each sale is the

beef on the bun. How can you makemore money from your casket sales?If consumer spending on caskets istrending down, do you think justcharging more makes a difference? The fact is that the casket and urn

market is oversaturated in the UnitedStates meaning more product isavailable for purchase than need.There are warehouses full of casketsand urns all over America, includingcaskets from smaller and foreigncompanies. Interestingly, some largeU.S. manufacturers are making low-cost caskets and distributing themthrough a network of local distrib-utors as well as operating facilities inforeign countries. In addition tooffshore or south-of-the-bordermanufacturing of caskets, themajority of cloth interiors and practi-cally all hardware for caskets areproduced outside of the U.S.Certainly, doing so by casketcompanies makes tremendous sensefor cost savings and profit, so why areyou paying so much and making solittle on your casket sales? What ifyou considered purchasing a casket ata lesser wholesale cost? In fact, the

“bigs” make “off-brand” caskets thatare sold through distributers.Interesting, but the same big casketcompany that you paid all that moneyto for a display room may be offering“knockoffs” that are just as good inquality, but at a lower cost anddistributed through local casketcompanies. So in many cases, youcould charge the family less for the“other casket” and still net moreprofit from each sale. Who loses insuch a transaction?The pricing of a range of urns

works with the same theory. Haveyou ever noticed from catalog tocatalog or at trade shows that thesame urns are sold by differentvendors? Incidentally, consumers findexactly the same ones available topurchase direct from various websites.Urns selected for display should neverhave any engraving (of course, I’mcertain you know that). Conduct aninventory of your offerings and assesswhich urns sell the most frequently (ifnot more than four times per year, getrid of them) and broaden the rangewith pricing that is attainable forfamilies and profitable for the firm.I am passionate about the funeral

profession and believe the future isextremely bright for those of us whounderstand this is a business first.There are very few comparable indus-tries from the perspective ofrelationships because that’s what webelieve. From the families that weserve and the people that workalongside us, to the vendors that sellus products and those that serve us asconsultants, it is personal.Generating enough profit to

continue serving and fulfilling ourcommunity missions is becomingincreasingly more difficult. Thisshould challenge us to focus on ourbusiness. In doing so, nothing iswrong with examining every aspect ofwhat we buy and whom we rely onfor counsel. Relationships in businessmust be mutually beneficial, if not, it’stime to step back and evaluate. Areyou paying a cost with little returnand appreciation? I’d enjoy hearingyour thoughts – let’s chat and I’lllisten. •

Pg. 32 Product or Services (Harbeson).qxp_Pg. 00 Ben Franklin 9/21/17 8:09 AM Page 33